Just two hours after panel members turned in their votes for a new LICH operator, LICH attorneys claim there may have been improprieties with the voting process. Photo: Mary Frost

Monday teleconference focus of scrutiny

By Mary Frost

Brooklyn Daily Eagle

Two hours after panel members turned in their votes for a new LICH operator, LICH attorneys raised questions about alleged interference with the voting process and threatened to take SUNY back to court if the allegations proved true.

Late Wednesday afternoon the Brooklyn Eagle received a copy of a letter from attorney Jim Walden of Gibson, Dunn & Crutcher claiming SUNY and the state Department of Health (DOH) might have inappropriately influenced members of the panel voting for a new operator for LICH during a Monday teleconference which was not monitored by the court or attorneys for LICH supporters.

During the call, Walden alleges, panel members were incorrectly instructed that bids proposing full-service hospitals “could not receive regulatory authority to take over operations at LICH.”

If DOH and SUNY provided such instructions, “the instructions were misleading and inaccurate,” and would be in violation of the settlement ending litigation between SUNY and advocates for LICH, Walden wrote to SUNY, DOH attorneys and the court.

Walden wrote: “During the underlying litigation, DOH took the position than an operator not licensed in New York could be qualified on a temporary basis under Public Health Law 2806-a.”

“We understand the Technical Committee was not advised of this process. To the extent DOH’s statements to the Committee constitute a denial of an application not even before it, that conduct is wholly inappropriate and . . . in violation of the settlement stipulation,” he wrote. (See below for the full letter.)

In a reply to Walden, SUNY attorney Frank Carone of Abrams, Fensterman, Fensterman wrote, “SUNY did not comment or instruct any technical scorer on how or what weight to give any of the proposers in any way.”

“To assist the evaluators in understanding the proposals, SUNY offered to provide an opportunity for a discussion with a representative from the NYSDOH on Monday, March 24, 2014 on Article 28 hospital regulations. Attendance was not required. In response to this invitation, one evaluator asked, “What does article 28 mean and does this teleconference have any bearing on our reviews as the teleconference is one day prior to when we need to return our responses.”

Carone wrote that during the teleconference, DOH provided an explanation of the process to obtain an Article 28 operating certificate. “It was stated that this process takes an average time period of 163 days. No one stated that a full-service operator would be unable to obtain an operating license.”

He added, “The bottom line is that the evaluators were free to evaluate in a manner that they individually deemed appropriate and without interference.”

Walden, who represents six community groups and the public advocate in the LICH litigation, is seeking documentation of SUNY and DOH’s instructions to the Technical Committee during the Monday call.

“In the event that you do not, or if we are correct in our understanding of the substance of these instructions, we will seek to appear forthwith before [state Supreme Court Justice Baynes] to enforce the Stipulation and Order," he wrote. (See below for his full letter.)

It has come to our attention that, in consultations with the Technical Committee created as a result of our settlement stipulation, SUNY and DOH may have acted inappropriately. Specifically, we understand that SUNY and DOH may have provided guidance to the Technical Committee that may have influenced its members to give a lower rating to the full-service hospital Offerors, based on a claim that these proposals could not secure regulatory authority to take over operations at LICH. We are writing to request clarification about the content of these instructions.

If SUNY and DOH provided such instructions, the instructions were misleading and inaccurate. During the underlying litigation, DOH took the position that an operator not licensed in New York could be qualified on a temporary basis under Public Health Law § 2806-a. The relevant portion of the provision states:

The established operator of a facility may at any time request the commissioner to appoint a temporary operator. Upon receiving such a request, the commissioner may, if he or she determines that such an action is necessary to restore or maintain the provision of quality care to the residents or patients or alleviate the facility's financial instability, enter into an agreement with the established operator for the appointment of a temporary operator to assume sole control and sole responsibility for the operations of that facility. [Public Health Law § 2806-a(2)(b).]

Mr. Zahnleuter explained this process on more than one occasion and, based on his guidance, we actually sought proposals privately from hospital turnaround ventures, which we discussed with you. We see nothing in this regulation that would prevent any of the proposed hospital bidders from seeking, with SUNY’s assistance, such regulatory approval to run a hospital at LICH. We understand that the Technical Committee was not advised of this process. To the extent DOH’s statements to the Committee constitute a denial of an application not even before it, that conduct is wholly inappropriate and, and discussed below, in violation of the settlement stipulation.

If SUNY and DOH provided such instructions, their conduct may be in violation of our Stipulation and Order, filed February 25, 2014 (the “Stipulation and Order”). On a basic level, the underpinning of our settlement is the reissuance of the RFP with the aim of finding a full-service hospital to assume operations at LICH. Stipulation and Order at 3-11. During settlement negotiations, SUNY and DOH knew that some Offerors would be entities not already licensed in New York, because the proposals submitted in response to the previous RFP included these types of entities. Furthermore, even a New York-licensed hospital would be required to obtain further approvals from DOH prior to commencing operations as a full-service hospital at a new location.

Despite this knowledge, SUNY and DOH negotiated and executed the Stipulation and Order, which requires that proposals providing for a “full-service hospital with at least 100 in-patient beds” or “include a teaching hospital or an affiliation with a teaching hospital” be “eligible for a higher technical score.” Stipulation and Order at 4. An instruction to the Technical Committee to assess lower scores to full-service hospital proposals would seem to violate these plain terms. Moreover, SUNY and DOH’s belief that a full-service hospital operator will be unable to secure a license to continue operations at LICH raises a concern about how they could have negotiated and executed these provisions in good faith.

The Stipulation and Order obligates all parties “to perform the obligations contained herein in good faith and to take no action inconsistent with this Stipulation and Order.” Stipulation and Order at 3. Guidance provided by SUNY and DOH to the Technical Committee that would result in lower scores to full-service hospitals, if true, may be seen as an effort to undercut the framework of our settlement, which is to issue a new RFP with the aim of finding a full-service hospital.

Likewise, if our understanding of the instructions provided to the Technical Committee is correct, and SUNY is assenting to the proposition that a full-service operator will be unable to obtain an operating license, SUNY may be in violation of its obligation to “cooperate with the Successful Offeror in obtaining any licensing and/or permits.” Stipulation and Order at 20. Moreover, such instructions could indicate that SUNY and DOH are making efforts to sidestep SUNY’s obligation under this provision and, further, raise additional questions about whether SUNY and DOH are attempting to undermine the effort to secure a full-service operator at LICH.

Please immediately provide us with the instructions conveyed to the Technical Committee during the recent conference. In the event that you do not, or if we are correct in our understanding of the substance of the instructions, we will seek to appear forthwith before Justice Baynes to enforce the Stipulation and Order.

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